Duterte signs EO on cash budgeting system

MANILA, Philippines — President Duterte has signed an executive order adopting the cash budgeting system to address what he called “significant gaps” in spending outputs and annual appropriations that delay the delivery of public services.

The shift from a multiyear obligations-based to annual cash budgeting is contained in EO No. 91 signed by Executive Secretary Salvador Medialdea by authority of the President last Sept. 9.

According to the budget department, annual cash-based budgeting limits incurring obligations and disbursing payments for goods delivered and services rendered, inspected and accepted within the fiscal year. Under the system, the extent of budget implementation is just one year, with an extended payment period of three months after the fiscal year. The cash budgeting system will start this year.

“Significant gaps between the actual expenditure outturns and annual appropriations translate to billions of pesos of delayed and forgone services, which should have been delivered to the general public,” the order read.

“There is a need to improve the fiscal planning of government agencies through the implementation of an operational cash budget and by setting deadlines for obligation of funds and execution of projects during the fiscal year, in order to speed up the implementation of programs and to promptly deliver goods and services to our people,” it added.

Under the EO, all authorized appropriations shall be available for obligation and disbursement only until the end of each fiscal year. Obligations incurred by the national government with each fiscal year shall be implemented during the same year.

Goods and services that correspond to obligations have to be delivered, rendered, inspected and accepted by the end of each fiscal year.

Payments for obligations incurred shall be made until the end of the three-month extended payment period unless another period has been determined by the budget department upon consultation with relevant agencies, the EO stated.

Appropriations covering financial subsidy to local government units will be available for obligation and release until the end of the succeeding fiscal year. Appropriations for the statutory shares of local governments shall be available for obligation and disbursement until fully expended.